Essays

Shedding Light on Shadow Banking

Demystifying the commoner’s financier – Mary Davis

Shadow banking has a bad reputation the world over, but particularly in China. Major media outlets and economists alike have demonized it, casting their black mark of economic imbalance across all faux-banking operations throughout the country. But what if they were not the evil shark-loaning, wobbly institutions that we’ve been made to believe? What if they were helpful more than harmful?

This was the opinion of one Chinese banker who left his job as deputy head of Investment Banking at UBS to become a shadow banker in 2011. After moving to the "dark side,” Joe Zhang ended up publishing a book on his experiences, Inside China's Shadow Banking, in which he described the greater opinion of shadow bankers in China to be “only slightly more respectable than perhaps massage parlors or nightclubs.”